C A M P A I G N F I N A N C E I N O H I O. Suzanne Novak, Maneesh Sharma and Bethany Foster

Transcription

1 C A M P A I G N F I N A N C E I N O H I O Suzanne Novak, Maneesh Sharma and Bethany Foster

2 Campaign Finance Reform Series Other Brennan Center publications pertaining to campaign finance include: Campaign Finance in Illinois Suzanne Novak and Seema Shah (2007) Campaign Finance in Michigan Suzanne Novak and Lauren Jones (2007) Campaign Finance in Minnesota Suzanne Novak and Paige Ammons (2007) Campaign Finance in Wisconsin Suzanne Novak and Seema Shah (2007) Paper Thin: The Flimsy Façade of Campaign Finance Laws in New York Suzanne Novak and Seema Shah (2006) Writing Reform: A Guide to Drafting State & Local Campaign Finance Laws Deborah Goldberg, ed. (4th ed. 2004) Public Funding of Judicial Elections: Financing Campaigns for Fair and Impartial Courts Deborah Goldberg (2002) For more information, please see or call This paper is covered by the Creative Commons Attribution-No Derivs-NonCommercial license (see It may be reproduced in its entirety as long as the Brennan Center for Justice at NYU School of Law is credited, a link to the Center s web page is provided, and no charge is imposed. The paper may not be reproduced in part or in altered form, or if a fee is charged, without the Center s permission. Please let the Center know if you reprint.

3 ABOUT THE BRENNAN CENTER FOR JUSTICE The Brennan Center for Justice at NYU School of Law is a public policy institute that works to strengthen democracy and secure justice through law, scholarship, education and advocacy. With Justice Brennan, we believe that a living constitution is the genius of American law and politics and that the test of our institutions is the ability to apply timeless values to a changing world. ABOUT THE BRENNAN CENTER S CAMPAIGN FINANCE REFORM PROJECT The Brennan Center has long been a leader in the fight for campaign finance reform on the national, state and local levels. We helped to draft the federal Bipartisan Campaign Reform Act of 2002, published path-breaking studies of television advertising that were introduced into the congressional record, and played a key role on the legal defense team winning a major victory in the U.S. Supreme Court. After assisting in the drafting of Connecticut s landmark public funding legislation, enacted in 2005, we were retained as lead counsel for intervenors in two consolidated cases challenging that law. We played the same role in the successful defense of the full public financing systems in Arizona and Maine. Building on ten years of experience in the field, the Center offers top-flight legal and policy assistance to government officials and activists seeking to develop and defend effective and constitutional campaign finance bills and initiatives. We identify each jurisdiction s core policy goals and then translate those goals into language appropriate for legislation or ballot measures. The Center reviews and analyzes text drafted by others for potential constitutional or other legal problems. Once legislation is introduced, Brennan Center attorneys accept invitations to deliver written and oral expert testimony. When campaign finance reforms are challenged in court, the Brennan Center has skilled and experienced litigators to present a vigorous defense. Finally, the Center s publications and public advocacy have amplified the First Amendment values in robust debate and participatory democracy served by campaign finance regulation. For advocates and legislators, we offer an accessible treatise on campaign finance law: Writing Reform: A Guide to Drafting State & Local Campaign Finance Laws, now in its fourth edition. Written by Brennan Center attorneys who have litigated campaign finance cases in federal and state courts throughout the nation, this 200-page book offers both practical tips and legal analysis for drafters of campaign finance reform bills or initiatives both those who want to stay within current constitutional constraints and those who want to test those limits.

4 ABOUT THE AUTHORS Suzanne Novak is a Deputy Director of the Democracy Program at the Brennan Center, responsible for coordinating the Center s Campaign Finance Reform and Government Accountability Projects. She is the author of several of the reports in the Brennan Center s Campaign Finance Reform series. Prior to joining the Brennan Center, Ms. Novak was a staff attorney in the Domestic Legal Program at the Center for Reproductive Rights in New York, where she had previously been a Blackmun Fellow. Ms. Novak was also a litigation associate at Arnold & Porter in New York and a clerk for the Honorable Stephen M. McNamee of the U.S. District Court for the District of Arizona. Ms. Novak graduated with honors from New York University School of Law. She can be reached at suzanne.novak@nyu.edu. Maneesh Sharma, a former Brennan Center legal intern, is a third-year law student at the University of Michigan, where he is a contributing editor of the University of Michigan Journal of Law Reform. Maneesh is a graduate of Wesleyan University with a degree in Government. He can be reached at maneeshs@umich.edu. Bethany Foster is a Research Associate at the Brennan Center, working on campaign finance reform and New York State government reform projects. She is a graduate of the University of Rochester with a degree in political science. Prior to graduation, Ms. Foster completed internships with Congresswoman Rosa DeLauro and the Human Rights Campaign. She may be reached at bethany.foster@nyu.edu. ACKNOWLEDGMENTS The Brennan Center for Justice at NYU School of Law is grateful for the guidance and comprehensive drafting and editing assistance provided by Democracy Program Director Deborah Goldberg. The Center also thanks Anne Arkush, a former Hayes Fellow at NYU, for her thorough analysis and Seema Shah for her research and contributions to the enclosed charts. The Brennan Center extends special thanks to Catherine Turcer of Ohio Citizen Action, to whom we are indebted for her thorough and practical understanding of Ohio s peculiar campaign finance law. Ohio Citizen Action is one of the Center s partners in the Midwest Democracy Network, a collaborative effort funded by the Joyce Foundation to examine the state of democracy in Illinois, Michigan, Minnesota, Ohio, and Wisconsin. This report was prepared under the auspices of the Brennan Center s Democracy Program. In addition to the Joyce Foundation, the Carnegie Corporation of New York and the JEHT Foundation have provided generous support for the Program s campaign finance reform research and advocacy. The statements made and views expressed in this report are the responsibility solely of the Brennan Center.

5 CONTENTS Foreword 2 Campaign Finance Reform: Why Does It Matter? 4 How Do Campaign Finance Laws Promote Honest Government? 5 How Do Campaign Finance Laws Keep Officials Responsive and Accountable? 5 Ohio s Laws In Perspective Contribution Limits 7 Disclosure 16 Public Financing 19 Enforcement 20 Recommendations For Reforming Ohio s Campaign Finance Laws 22

6 FOREWORD Full participatory democracy: it s been a national goal since America s founding. Today citizens recognize that money sometimes plays a warping role in electoral politics and hobbles progress towards full democracy. During the past decade, with Washington, D.C. mired in stalemate and in thrall to special interests, many states stepped forward and introduced innovative laws that enhance the power of ordinary citizens in the political process. States as different in political culture as Arizona and Connecticut have created bold systems to reform campaign finance laws, creating voluntary public financing and ensuring that enforcement is fair and vigorous. This report is the third of a five-part series that examines campaign finance laws and the ways they ve worked or haven t worked to limit the influence of money on politics in the heartland. This report assesses Ohio s campaign finance system; we have published similar reports for Illinois and Wisconsin, and reports about the systems in Minnesota and Michigan will be released soon. Throughout the last century, governments in these states often led the way for the rest of country, providing laboratories of democracy (in the phrase of Supreme Court Justice Louis Brandeis) that test and perfect new policies. Today, the governmental decisions made in these states affect millions of people and set the tone for the rest of the nation. The campaign finance studies are part of a comprehensive evaluation of democratic institutions that has been undertaken by the Midwest Democracy Network, a collaboration among national research and policy institutions and state-based advocacy organizations that work for honest and accountable government. With generous support from the Joyce Foundation, the Network is examining campaign finance, election administration, redistricting procedures, state courts, and local news coverage of politics in the five Midwestern states. In recent years, Ohio has risen to national prominence as a paradigm of dysfunctional democracy. Investigations into the 2004 elections have uncovered that Ohio voters disproportionately African-Americans were subjected to lines with waits reaching eight hours, severely understaffed polling places, and inaccurate ballot counts. The state also has been rocked by repeated corruption scandals. Coingate shook up the state s political leadership and led to various convictions. Gov. Bob Taft pled no contest in 2005 to charges of failing to disclose lobbyists gifts. In 2006, several political fundraisers were found guilty of theft, money laundering, and corrupt activity. Also in 2006, Congressman Bob Ney pled guilty to corruption charges stemming from the Jack Abramoff scandal. 2

7 With this troubled legacy, Ohio s campaign finance laws plainly need reform. This study finds: The state s limits on contributions from individuals, political committees, or political parties to state legislative candidates, on individual contributions to statewide candidates, and on political party donations to candidates rank among the highest in the nation. The weak limits that do exist are undermined by significant loopholes that allow wealthy donors to launder contributions through intermediaries. For the first time since 1908, corporations may now contribute to political parties. The only public financing system is a tax refund of no more than $50 for individual contributions to candidates. Now Ohio has a chance to turn the page, change its laws, and become a model for effective democracy. After recent scandals, Ohio improved its disclosure laws in Those laws recently ranked eleventh best in the country. But Ohio must do much more. Its disclosure laws mandate insufficient reporting for expenditures, have inconsistent and confusing provisions, and impose some requirements with questionable policy and legal underpinnings. Contribution limits must be drastically reduced, and loopholes eliminated. And a public financing system would go a long way towards making public officials less beholden to special interests, and more accountable to constituents. Now there is a new Congress in session in Washington and a new hunger throughout the country for honest, accountable government officials who answer the basic economic, health, and education needs of ordinary citizens. This is the time to revive laws consistent with public interest in government that is elected by and answers to ordinary citizens, not big-money interests. Nowhere is this more true than in the heartland, in what was once and can be again the testing ground for progress. Michael Waldman Executive Director, Brennan Center for Justice at NYU School of Law March

8 CAMPAIGN FINANCE REFORM: WHY DOES IT MATTER? Campaign finance laws seek to make government more honest and accountable to ordinary people, so that bread-and-butter issues such as education, taxes, and health care are not held hostage to moneyed interests. By placing limits on the influence of money on elections, campaign finance laws make it easier for elected officials in Ohio to respond to their constituents concerns, rather than those of wealthy political supporters. While all voters are equal in the voting booth, all voters are not equal in their ability to influence elections and policy. In states with inadequately regulated campaign finance systems, only wealthy individuals and special interests can make the substantial political contributions and advertising expenditures that move public debate and affect electoral outcomes. And although a $5 contribution from a low-income constituent may represent a much greater commitment than a $10,000 contribution from a millionaire, the latter usually has more power to influence the outcome of the election and to secure access to the candidate, once elected to office. Suppose, for example, that the coal industry wants the Ohio legislature to reduce corporate taxes. If contributions from that industry, its executives, and its lobbyists represent a large proportion of a candidate s campaign funds, that candidate may risk her political future if she resists industry pressure. She may find it hard to keep a promise to deliver tax relief for the middle class if small donations from moderate-income supporters cannot compensate for the loss of corporate largesse. The temptation to support industry rather than relieve ordinary taxpayers will be even greater if there is no way for the public to learn exactly who is financing the candidate s campaign and to connect the dots between corporate contributions and corporate tax breaks. When wooing wealthy supporters is the key to political success, honest government is difficult to sustain. Although many candidates and officeholders are people of high integrity, political corruption is a chronic problem. Money has been at the heart of political scandals throughout American history, from Teapot Dome to the indictment of Jack Abramoff. Recent scandals in the states have also involved campaign contributions made in exchange for political favors. Combating corruption is crucial to ensuring that the government s policies on everything from the economy to the environment serve the public interest, not special interests. Campaign finance laws can have other benefits as well. Public funding helps to ensure that whether a citizen can run for public office and conduct an effective campaign is determined more by the force of his ideas in the public arena than by his personal fortune or access to wealthy supporters. Such laws also free candidates and government officials from the rigors of fundraising so they can spend more time listening to their constituents and formulating the best policies for the State. Regulations that reduce this influence of money help voters hold their representatives accountable for policy-making that serves the common good. 4

9 HOW DO CAMPAIGN FINANCE LAWS PROMOTE HONEST GOVERNMENT? One of the most important and least controversial elements of campaign finance law is a requirement that certain political contributions and expenditures be reported to regulatory agencies for disclosure to the public. Reports of the sources and amounts of contributions to candidates from lobbyists, political action committees, and others give the public clues to the candidates likely political leanings on key issues and flag the interest groups to which the candidates are likely to be responsive. Voters may also glean such information from reports of large independent expenditures made in support of or opposition to candidates. The objective information in the official reports can provide a badly needed supplement to campaign advertising, especially if the reported information is easily accessible to the media and interested citizens in searchable, web-based databases. With more information, voters are better able to choose candidates who share their values and to hold politicians accountable for failures to represent their constituents interests. Reporting requirements open contributions and expenditures to public scrutiny, making it easier to detect exchanges of political favors for political donations. Contribution limits also help to protect governmental integrity. A large donation presents a much greater temptation to stray from campaign promises than a small contribution. Limiting the potential benefits of corruption may help to keep candidates and elected officials honest. Public financing also helps in this respect, by ensuring that candidates will be able to run effective campaigns without becoming beholden to private donors. Of course, none of the campaign finance tools will keep government honest without consistent and vigorous enforcement of the law. If candidates and contributors know that they can break campaign finance rules with impunity, they will have no incentive to follow legal requirements. An agency that is able and willing to enforce the law without regard to the partisanship of any candidate is essential to protecting the integrity of government. HOW DO CAMPAIGN FINANCE LAWS KEEP OFFICIALS RESPONSIVE AND ACCOUNTABLE? A variety of campaign finance measures can be crafted to ensure that elected representatives are accountable to their constituents, not wealthy interests. Disclosure requirements identify candidates financial supporters and allow voters to call elected officials to account if the policies they enact bear a suspiciously close resemblance to the policies favored by special interest contributors. Contribution limits of various kinds also promote accountability. Limits on the size of contributions to candidates, and of contributions to entities (such as political action committees or political parties) that may serve as conduits to candidates, reduce the potential influence of 5

10 CAMPAIGN FINANCE REFORM: WHY DOES IT MATTER? particular wealthy donors on particular cash-hungry candidates. Aggregate limits on contributions may prevent such donors from purchasing influence by spreading largesse across entire legislatures. Low contribution limits also encourage candidates to reach out to a broader base of supporters, including low- and moderate-income constituents. A candidate who needs widespread support from ordinary people is more likely to respond to their needs. In addition, generous public funding systems break the ties between access to wealth and electoral success, allowing candidates to respond to the full spectrum of voters. Arizona Governor Janet Napolitano, twice elected under Arizona s full public financing program, has explained how public financing was connected to her executive order creating a discount prescription drug program for the people of Arizona: If I had not run [under the public funding program], I would surely have been paid visits by numerous campaign contributors representing pharmaceutical interests and the like, urging me either to shelve that idea or to create it in their image... All the while, they would be wielding the implied threat to yank their support and shop for an opponent in four years. With public financing in place, government officials need not worry that honoring campaign promises popular with ordinary voters will translate to a lack of funds for their next campaign. Public financing programs, which provide partial or full grants for a candidate s campaign in exchange for limited spending, also permit candidates and officeholders to spend time on tasks more valuable than fundraising, such as studying and attempting to find the solutions to public policy problems and listening and responding to the concerns of ordinary citizens. Moreover, many qualified, dedicated individuals will not run for office if doing so forces them to dial for dollars all day. By lifting that burden, public funding encourages public service by people who care about constituents, not contributors. Finally, public funding opens doors to public service for individuals of modest means who cannot self-finance their candidacies and do not have wealthy friends to bankroll their campaigns. For example, Deborah Simpson, now in her fourth term in the Maine State Legislature, was a politically active single mother and waitress, who never considered running for office before Maine implemented public financing for its elections beginning in But she realized that with public funding she could run for office without having to figure out how to ask for money from donors when [she] really didn t live in that world. Because the public holds the campaign purse-strings, Rep. Simpson s constituents can keep her accountable for her legislative record and turn her out of office if she fails to respond to public needs. 6

11 OHIO S LAWS IN PERSPECTIVE CONTRIBUTION LIMITS Placing limits on contributions to candidates is an effective way for states to reduce the influence of moneyed interests on elected officials. Contribution limits free candidates from a dependency on a small number of wealthy donors, reducing the risk of actual or perceived corruption. Equally important, contribution limits force candidates to reach out to a larger portion of the populace, engaging a greater number of ordinary citizens in the political process. Contribution limits must meet certain requirements to be effective. The limits must be low enough to encourage a broad-based fundraising strategy, while high enough to allow candidates to run an effective campaign without spending all their time fundraising. Effective contribution limits also require strong protections against their circumvention. Loopholes that allow large amounts of money to flow to candidates undermine any contribution limit system. For example, limits must apply not only to contributions to candidate committees but also to donations to political action committees ( PACs ) and political parties, to ensure that wealthy donors cannot evade the basic limits by funneling additional contributions to candidates through such groups. Ohio s laws lack the necessary elements of an effective contribution limit system. The combination of the state s high contribution limits and a number of loopholes in the statutory system creates easy opportunities for abuse. The flow of money between parties and candidates is nearly unlimited, potentially allowing wealthy donors to circumvent the already high individual limits by sending large contributions to candidates through political parties. The state s limits often rank amongst the highest in the nation. Ohio has the highest limit in the country for contributions to state legislative candidates, whether the contributions come from individuals, PACs, or political parties, and the third highest for individual contributions to statewide candidates. Limits on political party donations to candidates are so astronomically high that they barely constitute limits at all, and no limits are placed on what candidates may donate to political parties or what state political parties may give to county political parties. Sadly, Ohio has been moving in the wrong direction with its contribution limits. The current contribution limits are a result of a massive overhaul of campaign finance measures in 2004, known as House Bill 1. 1 Limits on individual contributions to statewide candidates rose from $2,500 to $10,000 per election. In addition, the new law allows corporations to contribute to political parties, reversing a ban that had been in effect since On a more positive note, the General Assembly recently tightened Ohio s pay-to-play laws by passing Substitute House Bill 694 in December This new law closed up loopholes in Ohio s former law regarding contributions by state contractors, and provides new restrictions on the solicitation and giving of contributions by state contractors and prospective state contractors. 7

12 OHIO S LAWS IN PERSPECTIVE CONTRIBUTIONS FROM INDIVIDUALS Ohio s limits on individual contributions are consistently among the highest in the nation. Individual contributions to statewide candidates are limited to $10,000 per contested primary or general election for a total of up to $20,000 over an election cycle. 3 Of those states that limit individual contributions to statewide candidates, Ohio s limit is the highest in the Midwest, and the third highest in the nation. 4 See Figure 1. FIGURE 1: Limits on Contributions from Individuals to Candidates for Governor a Top 10 Highest Limits b a Limits are per election cycle. b States without contribution limits are not included in this comparison. Ohio sets its individual contribution limits for State Senate and House candidates at the same $10,000 per election as for statewide candidates, even though legislative candidates run in much smaller districts. That $20,000 limit for an election cycle ranks as the highest limit in the country for state legislative candidates. The limit for candidates for State Senate is 32% larger than the next highest, which is New York s at $15,500. See Figure 2. Like individual contribution limits for statewide candidates, the limits on contributions to state legislative candidates were quadrupled by House Bill 1, the 2004 legislation that overhauled Ohio s campaign finance provisions. Ohio is the only state in the Midwest to set its limits on contributions from individuals to state legislators at the same level as those to statewide candidates. 8

13 FIGURE 2: Limits on Contributions from Individuals to Legislative Candidates a Top 5 Highest Limits b STATE SENAte STATE HOUSE a Limits are per election cycle. b States without contribution limits are not included in this comparison. Ohio places a limit of $10,000 per calendar year on contributions from individuals to PACs, tying Ohio with the District of Columbia for the fourth highest limit in the country. These limits were doubled by the passage of House Bill 1. While this limit is high, Ohio is one of only twenty-four states (including Washington, D.C.) that place limits on these types of contributions, and is the only state in the Midwest to do so. Twenty-three states (including Washington, D.C.) limit contributions from individuals to political parties, and Ohio is one of only two Midwest states to do so. Ohio s individual limits on contributions to political parties are so exceptionally high, however, that they are unlikely to be effective. The state allows an individual to give $30,000 per year to state political parties, ranking the state second in the nation among states that have such limits, behind New York. 5 In addition, House Bill 1 greatly increased limits to political parties, now allowing individuals to contribute up to $10,000 per year to the political party of the county in which the individual resides, and $15,000 per year to legislative campaign funds, which are auxiliaries of state political parties that support the parties candidates for a particular house of the General Assembly. 6 Prior to House Bill 1, individuals were allowed to contribute up to $5,000 to a county political party or a legislative campaign fund. 9

14 OHIO S LAWS IN PERSPECTIVE CONTRIBUTIONS FROM CORPORATIONS AND LABOR UNIONS Aside from giving to parties restricted funds and Levin funds, discussed below, corporations are banned from contributing to candidates, political parties, PACs not set up solely to support ballot issue campaigns, and legislative campaign funds. Labor organizations, however, are allowed to use their funds in support of candidates, political parties, PACs, and legislative campaign funds, pursuant to Ohio court decisions striking down bans on partisan political activity by labor organizations as an unconstitutional impingement on First Amendment rights. 7 Labor organizations must form a Political Contributing Entity ( PCE ) in order to make contributions. PCE contributions are limited in the same way as PAC contributions. CONTRIBUTIONS FROM POLITICAL COMMITTEES Ohio s limits on contributions from PACs also rank among the highest in the country. The contribution limits applied to PACs largely parallel those applied to individual donors. PACs are allowed to contribute up to $10,000 per election to statewide candidates. This limit ranks fifth highest for gubernatorial candidates among those states with such limits. See Figure 3. Ohio has company in the Midwest, however, as two of the states with higher limits on these types of contributions are Michigan and Wisconsin. 8 FIGURE 3: Limits on Contributions from Political Action Committees to Gubernatorial Candidates a Top 10 Highest Limits b a Limits are per election cycle. b States without contribution limits are not included in this comparison. C This limit applies to PACs established by business entities. Other PACs in Connecticut are limited to $5,000 per election cycle. 10

15 Ohio s $10,000-per-election limit on contributions from PACs to state legislative candidates places it highest on the national list for limits of this type. The limit for PAC contributions to State Senate candidates is double the next closest limit of this kind in the Midwest. Ohio s limit for PAC contributions to State House candidates is at least double that of 94% of the states with such limits. See Figure 4. FIGURE 4: Limits on Contributions from Political Action Committees to Legislative Candidates a Top 5 Highest Limits b STATE SENAte STATE HOUSE a Limits are per election cycle. b States without contribution limits are not included in this comparison. Ohio limits PAC contributions to state political parties to $30,000 per year, and $15,000 per year for contributions to legislative campaign funds. PACs are prohibited from contributing to county political parties. The $30,000 limit on contributions to state parties is the third highest in the country, behind only New York and California. PACs in Ohio may contribute up to $10,000 per year to other PACs. Of the states that limit such contributions, Ohio s limit is the highest in the nation. 9 11

16 Limits on Contributions from Individuals to: Candidates for Illinois Michigan Minnesota Governor $3,400/election cycle* $2,000/election year** Other Statewide Candidates $3,400/election cycle $500-$1,000/ election year State Senator $1,000/election cycle $500/election year Ohio $10,000/election*** $10,000/election $10,000/election Wisconsin $10,000/election cycle $10,000/election cycle $1,000/election cycle Limits on Contributions from PACs to: Candidates for Illinois Michigan Minnesota Governor $34,000/election $2,000/election year Other Statewide Candidates $34,000/election $500-$1,000/election year State Senator $10,000/election $500/election year Ohio $10,000/election from political action committees or political contributing entities $10,000/election from political action committees or political contributing entities $10,000/election from political action committees or political contributing entities Wisconsin $43,128/election cycle $8,625 - $21,560/election cycle $1,000/election cycle Limits on Contributions from Political Parties to: Candidates for Illinois Michigan Minnesota Governor $68,000/election cycle $20,000/election year Other Statewide Candidates $68,000/election cycle $5,000-$10,000/election year State Senator $10,000/election cycle $5,000/election year Ohio $1,628,000/election cycle from state and county party units, including legislative campaign funds $1,628,000/election cycle from state and county party units, including legislative campaign funds $618,500/election cycle from state and county party units, including legislative campaign funds Wisconsin $700,830/election cycle from all committees including political parties $140,156 - $350,350/election cycle from all committees including political parties $22,425/election cycle from all committees including political parties Limits on Contributions from Corporations to: Candidates for Illinois Michigan Minnesota Governor Other Statewide Candidates State Senator Ohio Wisconsin Limits on Contributions from Labor Unions to: Candidates for Illinois Michigan Minnesota Governor $100/year Other Statewide Candidates $100/year State Senator $100/year Ohio $10,000/election $10,000/election $10,000/election 12 Wisconsin

17 State Rep $500/election cycle $500/election year $10,000/election $500/election cycle Entities PACs $10,000/year $10,000/year Political Parties $30,000/year to state political party $10,000/year Other $10,000/year to any political contributing entity; $10,000/year to any county political party; $15,000/ year to any legislative campaign fund * Election cycles may differ by state and by office (i.e. 4-year cycle for governor, 2-year cycle for state senators). ** States with limits per election year also have lower limits on non-election year contributions. State Rep $5,000/election $500/election year $10,000/election from political action committees or political contributing entities Entities PACs $10,000/year from one political action committee or political contributing entity to another Political Parties $15,000/year to any one legislative campaign fund; to county political parties Other *** Primary, general, and special elections are considered separate elections. $500/election cycle $6,000/year Entities State Rep $5,000/election cycle $5,000/election year PACs Political Parties Other Party expenditures that do not name any candidate or that fund mailings, phone calls, fundraising or party committee staff that benefit three or more party candidates are not counted toward the contribution limits for individual candidates. $309,000/election cycle from state and county party units, including legislative campaign funds $10,000/year to any one political action committee or any one political contributing entity from county political party to another county political party; from legislative campaign fund to state candidate fund of political party Individual Limits differ for contributions from county parties; Individual limits differ for contributions from legislative campaign funds $11,213/election cycle from all committees including political parties Entities State Rep PACs Political Parties Other Entities State Rep $100/year $10,000/election PACs $100/year $10,000/year to another PAC or political contributing entity Political Parties $100/year $30,000/year to any state political party candidate fund Other Other limits apply for legislative campaign funds and contributions to Levin accounts 13

18 OHIO S LAWS IN PERSPECTIVE RESTRICTED FUNDS AND LEVIN ACCOUNTS In addition to Ohio s relatively high contribution limits, Ohio s campaign finance system contains two significant loopholes that can be exploited to circumvent prescribed limits on individuals, PACs, corporations, and labor unions. Ohio law allows wealthy donors to give unlimited sums to political parties through the parties restricted funds and Levin funds. Under Ohio law, political parties are required to establish what are called restricted funds. Parties ostensibly use money from this segregated account for generic party building activities and costs, such as general advertising not promoting any specific candidates, rent, facility maintenance, and staff salaries. Money in these funds may not be used to promote the election of any particular candidates, and parties may not transfer the money into any fund that may make contributions or expenditures. Such money, however, frees up other money that can be spent to promote the success or defeat of a candidate. Gifts deposited into the restricted funds do not count as contributions under Ohio s campaign finance laws. This means that on top of the amounts in contributions allowed by law for supporting and opposing candidates, sources other than corporations and labor unions may give unlimited amounts for generic party building. Moreover, House Bill 1 permitted corporations and labor unions to give up to $10,000 to a party s restricted funds per year. This change in the law reversed a ban on political donations from corporations that had been in place since Ohio law applies similar limits to Levin funds. Parties may establish Levin funds to pay for activities related to voter registration, voter identification, get-out-the-vote drives, and generic campaign activities. Corporations, nonprofits, and labor unions may give up to $10,000 per year to Levin funds, but can give only during years that a federal candidate will appear on the ballot. Any other person, excluding a public utility, may make gifts in unlimited amounts at any time to such funds. 11 CONTRIBUTIONS FROM POLITICAL PARTIES The limits Ohio applies to contributions from political parties to candidates are so exceptionally high that they are effectively meaningless, opening significant gaps in the statutory system. These gaps are exacerbated by Ohio s lack of restrictions on money transferred between state political parties, county political parties, and legislative campaign funds. These loopholes create easy pathways for candidates to obtain money that, if given directly to the candidates, would be prohibited. For example, political parties can direct donations from a wealthy contributor to candidates to whom the wealthy contributor has already given the maximum contribution. Parties can shift money freely between the state party and the county parties, allowing the parties to circumvent the already ineffectively high limits on party-to-candidate contributions. 14 For example, statewide candidates are allowed to accept up to $564,000 in cash and cash equivalents from state political parties per election and unlimited amounts of in-kind contributions. These candidates may also accept a total of $250,000 in cash and in-kind donations

19 from all county political parties combined. Surprisingly, the current limits on county parties are actually an improvement over the limits that were in place prior to House Bill 1 reduced the limit on contributions from county political parties to statewide candidates from $500,000 in cash and an unlimited amount of in-kind contributions to the current $250,000 combined limit. Of the twenty-seven states that limit contributions from political parties to statewide candidates, Ohio with limits that total $1,628,000 from state and county political parties over an election cycle is the largest by far. It is more than three times the next highest such limit. 12 The closest equivalent contribution limit in the Midwest, found in Michigan, is one-eighth the size of Ohio s. 13 Ohio s limits on contributions of cash and cash equivalents from political parties to state legislative candidates are extremely high as well. State Senate candidates may accept $112,500 from state political parties per election, and another $112,500 per election in aggregate from all county political parties combined. Furthermore, senate legislative campaign funds may contribute up to $56,000 to a Senate candidate for the primary election and $112,500 during the general election. Similarly, State House candidates may take up to $56,000 in cash and cash equivalents from state political parties per election, and they may take $56,000 per election in aggregate from all county political parties combined. They may also accept $29,000 for primary elections and $56,000 for general elections from legislative campaign funds. In sum, a political party, through its state and county parties and legislative campaign funds, can give cash and cash equivalents totaling $618,500 to a State Senate candidate and $309,000 to a State House candidate over an election cycle. Florida, which allows its Senate and House candidates to receive $100,000 from political parties over an election cycle, is the only other state whose limits for political party contributions to legislative candidates crack six digits. Moreover, in-kind contributions from state political parties and legislative campaign funds are unlimited. In addition to these high limits on political party giving, another significant weakness in Ohio s campaign finance system emerges. Ohio has no limits on candidate-to-candidate or candidate-to-political-party giving. The transfer of money back and forth between candidates and between candidates and political parties offers an easy way to circumvent contribution limits. For example, individuals who have reached the contribution limit for a candidate may give to another candidate, who may then transfer the money to the original candidate. Contributions that, if given directly to candidates would violate contribution limits, also may be laundered through political parties. 15

20 OHIO S LAWS IN PERSPECTIVE DISCLOSURE As sunlight is the best disinfectant, so campaign finance disclosure laws play an essential role in exposing corruption and maintaining faith in government. Ohio improved its disclosure laws in 2004 with House Bill 1, following several major scandals involving undisclosed donations to political parties restricted funds. In October 2005, an independent study of campaign disclosure laws and practices awarded Ohio a grade of B- for its overall campaign disclosure system, the eleventh best in the country. 14 Ohio s disclosure system has many strengths, including the frequency of reporting, the detailed information required for reported contributions, the comprehensive reach of its laws, and the electronic disclosure system. Weaknesses of Ohio s disclosure laws include insufficient reporting for expenditures, inconsistencies between the laws, confusing provisions, and questionable policy and legal underpinnings for some requirements. GENERAL REQUIREMENTS UNDER OHIO LAW At the beginning and end of each election year, at the midpoint of each election year, and before and after a primary and general election, candidates in Ohio are required to file disclosure reports with information about both contributions and expenditures. Candidates for statewide offices also must make monthly disclosure reports of contributions received during July, August, and September of an election year. Independent expenditures must be reported on the same filing schedule as candidate expenditures. Moreover, statewide candidates who receive or expend more than $10,000 must file electronically, as must state legislative candidates who receive more than $10,000 in contributions. The candidate reports must provide detailed information about contributors who give more than $100, including the contributor s occupation and employer. Expenditure reports, however, do not prove as useful. The reports require candidates to indicate to whom the payment was paid and for what purpose. Independent expenditure reports require a spender to indicate which candidate the expenditure supported or opposed, but Ohio law fails to require pre-election disclosure of last-minute independent expenditures. Such weaknesses led the disclosure study to award Ohio a C+ for its campaign disclosure requirements, which ranked Ohio twenty-fifth in the nation. As discussed below, Ohio received high grades for its electronic filing program, however, raising its overall grade to a B-. Ohio s disclosure laws have been improving. House Bill 1 added several disclosure requirements. Responding to scandals involving large donations given to political parties restricted funds, all money given to these funds must now be disclosed. County political parties must disclose all donors to their state expense accounts. House Bill 1 also added the semiannual reporting requirement. ELECTIONEERING COMMUNICATIONS House Bill 1 overhauled Ohio s regulations of electioneering communications, creating a unique and peculiar system. 16

21 Electioneering Communications Defined Under Ohio Law Ohio defines an electioneering communication as a broadcast, cable, or satellite communication that refers to a clearly identified candidate and that is made during the following time periods: (1) for a primary election, the period between the date the candidate is certified for placement on the ballot (which occurs sixty days before the primary election) and the thirtieth day prior to the primary election (which is held on the first Tuesday after the first Monday in May); and, (2) for a general election, the period between the primary election and the thirtieth day before the general election. Electioneering advertisements run in the last thirty days before an election in Ohio are presumed to be expenditures, and must be reported as expenditures or independent expenditures, as applicable. Under Ohio law, expenditures are defined in terms of their purpose (influencing the results of an election), while electioneering communications are defined by their reference to candidates through specific media at specific times. Ohio s definition of electioneering communications flips the definition of the term found in the federal Bipartisan Campaign Reform Act ( BCRA ) on its head; BCRA defines electioneering communications as broadcast, cable or satellite communications that refer to a clearly identified candidate, are targeted to the candidate s constituents, and that are made in the thirty days immediately preceding a primary election or the sixty days immediately preceding a general election. Electioneering communications under Ohio law encompass advertisements that clearly refer to a candidate and are run between the beginning of March and the beginning of November except for the 30-day periods immediately preceding the primary and general elections. Regulation of Electioneering Communications in Ohio Electioneering communications in Ohio are subject to a number of disclosure rules. First, any person or committee intending to make an electioneering communication must file a notice of intent with the Secretary of State s office prior to making any disbursements for the communication. Those filing such a notice need provide only their name and address. This provision seems designed to promote compliance, as the Secretary of State s office sends information of disclosure and disclaimer requirements to those who file such notices. 15 Within 24 hours after spending more than $10,000 on electioneering communications in a calendar year, persons or committees must file a disclosure report with the Secretary of State s office. Weekly reports must be made for each week in which the person or committee makes any additional disbursements. Disclosure reports must include information on the person making the disbursement and any person sharing direction or control over the activities of the person making the disbursement, the amount and recipient of each disbursement, and the relevant election and candidate names. Detailed information must also be provided on persons contributing $200 or more to the person or entity making the disbursement. Electioneering communications must include a disclaimer clearly indicating that the communication is not authorized by the candidate identified in the ad. The disclaimer must also clearly identify the person making the disbursement. 17

22 OHIO S LAWS IN PERSPECTIVE Implications of Ohio s Definition of Electioneering Communications As discussed above, campaign advertisements that clearly identify a candidate and are made in the last thirty days before an election in Ohio are presumed to be expenditures, and must be reported as expenditures or independent expenditures, as applicable, not as electioneering communications. These classifications result in different restrictions and requirements under Ohio s disclosure laws. Disclaimer requirements are the same for electioneering communications and expenditures, but there seems to be no prior notice requirement for expenditures. The big difference between the two, however, is that expenditures may be made only by political entities, e.g., individuals, political parties, PACs, etc., that are permitted to make direct contributions to candidate campaign committees, whereas electioneering communications made more than thirty days before an election may be financed by any person or entity, including for-profit and certain nonprofit corporations. 16 The strange implications of Ohio s definition of electioneering communications are worth noting. Advertisements designed to affect elections often are aired prior to the thirty days before an election, 17 which is presumably why Ohio added the disclosure requirements for these ads. But the further from the election, the more likely that an electioneering communication will be intended not as electioneering, but rather as genuine issue advocacy, especially if the communication is aired during the legislative session. Oddly, Ohio has stricter disclosure requirements for electioneering communications than expenditures, even though the former are less likely to be intended to influence elections than the latter. Unlike electioneering communications, which require disclosure filings for each week an ad is run, expenditures require reports only once in the thirty days before an election, and they require the disclosure of less information. These oddities mean that Ohio s electioneering communications regulations may raise some questions under the First Amendment. There are differences between Ohio s law and the disclosure rules for electioneering communications as defined in BCRA, which were upheld by the United States Supreme Court. Most importantly, Ohio applies heightened disclosure requirements for longer periods of time, and accordingly further removed in time from an election. Such requirements may deter groups from airing ads genuinely aimed at influencing public policy and not elections, both because of a loss of donors anonymity and because of the administrative burden involved. While recognizing the First Amendment interests in speaking anonymously, the Supreme Court repeatedly has upheld campaign finance disclosure requirements based on the public s interest in learning the sources of funding behind advertisements that influence elections. Because Ohio s regulations are more likely than BCRA s to regulate some genuine issue ads, and not just ads intended to affect elections, Ohio will need a strong record of election advertising over the longer regulatory period to justify the greater burdens. 18